In June, the United States Supreme Court ruled on one of the most anticipated cases in decades—the landmark Patient Protection and Affordable Care Act (ACA). The Court decided that ACA was constitutional and upheld the mandate that most Americans obtain insurance by 2014 or pay a financial penalty.
“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” Chief Justice John Roberts wrote for the court’s 5-4 majority opinion. Court watchers had expected the Court to base its decision largely on the Commerce Clause of the Constitution. But many were surprised that while the Court did say the ACA was unconstitutional under the Commerce Clause, the Court allowed ACA to proceed under the taxing powers of Congress.
While this means the law will move forward with the implementation benchmarks scheduled for 2013 and 2014 barring Congressional action, there are still many moving parts to consider.
Up to this point, much of health care reform implementation has fallen on insurance companies and state legislatures.
States are obligated to create a health care “exchange” by 2014 that will allow individuals and small businesses to review qualified health care options. Right now, many states are refusing or delaying the creation of exchanges, which will force the federal government to create an exchange for these states. Employers are currently caught in a holding pattern, waiting to see what each state will do moving forward. Under a technicality of the ACA, employers in states with a federally run exchange may not be subject to the employer penalty if they do not offer coverage.
Another highly publicized requirement will begin in 2014—the individual mandate. Most individuals will be required to carry coverage through their employer, purchase health care coverage on their own through an exchange, or a pay penalty (or what the Supreme Court termed a tax) to the federal government.
Perhaps the most pertinent issue for hoteliers will be the employer mandate that begins in 2014, as the ACA sets a minimum baseline of coverage and minimum employer contributions to health care premiums.
Employers with 50 or more full-time employees will pay a penalty of $2,000 a year for each full-time worker (after the first 30 who seek health care through an exchange) if the employer does not provide qualified coverage. Employees offered coverage by their employer will be restricted from purchasing coverage through an exchange—as long as their employer-offered coverage meets a minimum standard (which notably includes not allowing employees to contribute more than 9.5 percent of income for health care premiums).
Another notable requirement laid out by ACA is the new taxes set to go into effect over the next few years. The Medicare Payroll Tax of .9 percent on certain high wage earners will begin in 2013. A new tax as laid out in ACA on insurance companies will begin in 2014. In addition, employers will incur a 40 percent tax, a “Cadillac Tax,” on certain high-end insurance plans starting in 2018.
A STARTING POINT
AH&LA continues to support common sense reforms that provide responsible options for business operators. In partnership with our health care employer coalition, AH&LA has—and will continue—to work for a repeal of the employer mandate and various taxes that will increase costs of coverage. AH&LA continues to support reasonable exemptions for part-time and seasonal employees so as to not penalize a growing small business.
AH&LA has heard from many members who have used Health Savings Accounts and Flexible Spending Accounts as a means to provide health care benefits to its members. Businesses appreciate the flexibility it provides employees, allowing them the ability to make their own health choices. Last year’s reform inexplicably limits the use of these accounts by business. AH&LA will continue to work with other industries to seek a restoration, and even expansion, of HSA and FSA accounts for our members.
Complicating the HR planning for many businesses is the fact that many key regulations are yet to be promulgated by the federal government. Congress and either President Obama or Romney will have tremendous opportunity to affect the final regulations. The employer community has weighed in on the key issues that will be decided by regulation.
Many insurance providers and plan administrators were waiting for the Court’s decision before beginning to implement these requirements. While the ACA’s Constitutionality has been settled, the future of ACA remains uncertain. Congressional Republicans have held votes to repeal ACA, which were successful in the House but not introduced in the Senate. While the results of the November elections may impact how the law is implemented, there are several long-term regulatory requirements that employers must begin to develop a plan, such as the 2014 employer mandate.
Fixing health care reform will take years and AH&LA will continue to be your advocate during this ongoing process. We encourage you to visit www.ahla.com to follow our alerts, advisories, web postings, webinars, and meetings.